How to Negotiate for Better Payment Terms

Keeping more dollars in your pocket, for as long as possible, is a major goal for many people and organizations in turbulent economic times. One way to maximize your cash flow is to negotiate better payment terms on your existing and upcoming bills. Convincing vendors, suppliers or money lenders to reduce the amount of money owed for an item or to extend the due date on an invoice gives you more flexibility with your cash.

Instructions

1. Contact a person with the authority to make the payment changes you desire. Ask for a supervisor when contacting a credit-card company or bank, or ask for the accounting or sales manager for your account when dealing with a vendor or supplier.

2. Establish your history with the vendor or money lender. Mention how long you or your company have worked with the vendor, how often you utilize the vendor's services and the likelihood of future work.

3. Tell the vendor what payment terms are desired. Ask for a lower price on future purchases, a lower interest rate, a discount on existing invoices, an extended due or net-payable date, or any other advantageous payment terms. Be firm and persistent but reasonable.

4. Negotiate various options with the vendor if he balks at the proposed payment terms. Offer a slightly higher purchase price or a larger volume of your business if you can and are willing to do so. Arrange to pay a money lender sooner and in full if she provides a discount. Work out terms that contain a favorable solution for both parties.

5. Describe rates or products offered by the vendor's competitors if the vendor still won't negotiate. Research the information prior to entering into negotiations with your current vendor. Threaten to close the account or stop purchasing the current vendor's services if the representative is not willing to negotiate better payment terms. Only use this method as a last resort, and only if you are actually willing to close your account with the vendor.

6. If you are successful negotiating terms, request a copy of the new payment terms in writing. Keep the new payment terms in your files in case accounting issues arise.

Tips & Warnings

• The standard net-payable due date is 30 days after the receipt of a product or service.

References

• Business Insider: The Best Ways To Negotiate With Your Vendors And Increase Your Cash Flow
• Spartina: Negotiating Payment Terms
• Kiplinger: How to Negotiate a Lower Credit-Card Rate
• CreditCards.com: 6 Credit Card Terms You Can Negotiate and Change
• CreditCards.com: Credit Card Debt Negotiation in 3 (Not) Easy Steps